Former CTPartners CEO, Brian Sullivan, Dumps 873,806 Company Shares

June 5, 2015 – The former CEO of CTPartners, Brian M. Sullivan, has sold 873,806 shares of CTPartners stock.

The stock was sold earlier this week at an average price of $2.96, for a total transaction value of $2,586,466. Following the completion of the sale, Mr. Sullivan will directly own 24,097 shares of the company’s stock, valued at just $71,327. Mr. Sullivan stepped down as CEO of the publicly-traded search company in April amid alleged accusations of sexual discrimination bias and a reported investigation by the EEOC into discriminatory actions made by some members of the company’s senior management team, including Mr. Sullivan.

Over a turbulent five-month period the company withdrew two stock offerings, high level defections ensued, its lenders and banks balked and the company was forced into takeover talks with a Chicago-based rival, DHR International. That deal is pending while DHR sifts through the company’s financials and makes an assessment of its outstanding debt load, its legal issues, and what sort of impact the defections of more than 40 executive recruiters has had on CTPartners business.

Like any company, CTPartners ability to continue as a going concern is dependent on its ability to generate sufficient cash from operations to meet its cash needs and/or to raise funds to finance ongoing operations and repay debt. The company has been in violation of certain covenants contained in its credit facility and the purchase agreement associated with its subordinated notes relating to the departure of search consultants as of April 30. CTPartners does not have sufficient cash flows from operations or cash resources to repay its credit facility or notes payable if they become immediately due and payable at its lender’s discretion.

“These factors indicate that CTPartners may be unable to sustain itself as a going concern outside of 12 months,” said Hunt Scanlon Media president Christopher W. Hunt.

For the period ending March 31, CTPartners revenue decreased by $5.2 million, or 13 percent, to $34.7 million over the same quarter a year earlier. During this three-month period, CTPartners sustained a $1.1 million loss.

Consultant departures were reported by CTPartners as the primary reason for its Q1 decline. But a closer look at the departure of Mr. Sullivan himself shows further reason for concern. Elected as chief executive in September 2004, Mr. Sullivan took home one of the most lucrative base salaries of any publicly traded executive search company CEO: $750,000 per year. Even the chief executive officer of the world’s largest executive recruiter, Korn Ferry, took home less base pay. Adding insult to injury, since CTPartners board of directors treated his departure as a termination “other than for cause” under the terms of his employment agreement, Mr. Sullivan is now entitled to six to 18 months’ severance of that base salary. This means Mr. Sullivan will be handed $62,500 per month, or $1,125,000 over the next year and a half if his board agreed to offer him the full extent of his contract.

CTPartners stock traded as high as $23.75 last year under Mr. Sullivan’s stewardship. Based on that stock price and the price he was paid on Tuesday for the bulk firesale of his shares, Mr. Sullivan took a staggering paper loss of over $18 million. That financial hit will likely provide some small measure of solace to Mr. Sullivan’s former employees, their families, his ex-partners, and the company’s investors.

Contributed by Scott A. Scanlon, Editor-in-Chief, Hunt Scanlon Media

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6 Comments on "Former CTPartners CEO, Brian Sullivan, Dumps 873,806 Company Shares"

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Anonymous
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If my math is right from the May 20 article, the exclusivity agreement time has lapsed (20 days from May 20). Wonder what the next steps are

Anonymous
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The behavior that was tolerated, actually embraced, during the tenure of Jeff Christian, was never completely removed from the firm. It was simply diluted, and hidden, but the appearance of a much bigger firm with “offices” in more and more remote locations across the globe. The current CEO, initially a Director of Finance for the firm when he started (over 15 years ago), embraced JEC’s philosophy of suing every high revenue individual that dared to leave the firm. Some of those individuals are still with the firm, and the use of the firm as a personal bank account for business… Read more »
Scott Scanlon
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I’m not sure how much sense it makes to dig back all the way to Jeff Christian’s time with the company. That was literally an eternity ago. As for the company’s current chief executive, yes he sold stock but I’m not sure how much you can fault him for that. What I do find fault with is a board that has once again approved a mega pay package for its new CEO, allowing him to take down the identical base pay as Mr. Sullivan. $750,000 per year is an awful lot of money to pay out to a chief executive… Read more »
Anonymous
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I cannot believe the audacity of Brian Sullivan. What a greedy bum. He runs the firm into the ground, puts dozens out of work, many who cannot afford to be so, then cashes in on his big payday. I was shocked he makes more than Gary Burnison a guy who runs a $1 billion search firm that’s profitable. Well, he got his “just desserts” and was run out of town on a rail. The last of him in this industry I hope!

Anonymous
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Awesome story guys. Nice work.

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